TIDMHAT
RNS Number : 5283A
H&T Group PLC
23 January 2024
23 January 2024
H&T Group PLC
("H&T" or the "Group")
Trading Update and Notice of Results
H&T Group Plc ("H&T" or "the Group"), the UK's largest
pawnbroker and a leading retailer of high quality new and pre-owned
jewellery and watches, today provides an update following
completion of the financial year ended 31 December 2023.
Performance in the fourth quarter of the year was robust. The
Group expects to report record profits for 2023, up c.40% year on
year.
As has been widely reported, retail trading conditions in the
peak pre-Christmas period were challenging. This was particularly
the case in December. As a consequence, reported pre-tax profits
for the year are now expected to be approximately 10% below current
market forecasts.
Pawnbroking
Demand for our core pawnbroking product remains at record
levels, across all geographies. Aggregate lending in 2023 amounted
to GBP260m (2022: GBP218m), an increase of 19%. As at 31 December
2023, the pledge book amounted to c.GBP131m, up 30% on the 31
December 2022 balance of c.GBP101m, and ahead of management's
expectations. Average loan sizes have remained broadly consistent
with those for the first half of the year, with the median loan
size being GBP201 (30 June 2023: GBP200). Redemption rates are
consistent at c.85%. Loan to value ratios remain at c.65%.
Action taken in mid-2023 to mitigate valuation volatility in
respect of certain watch brands resulted in the proportion of
watch-based lending falling from 17% of total lending in June, to
14% in December. The value of the pledge book secured on watches at
the year end reduced by c.GBP1.25m relative to 30 June. Loans
secured on watches currently represent 15% of the pledge book (30
June 2023: 17%).
The Group has implemented changes to its pricing structure for
pledge lending, in order to improve yield and generate incremental
revenue. Loan demand to date in January has been particularly
strong.
Retail
Trading conditions in the fourth quarter were challenging, given
pressure on customers' disposable income. Against this backdrop,
sales by volume of items increased 3% relative to the fourth
quarter of 2022. However, customers displayed caution in their
spending, with a significant shift towards lower priced items.
New jewellery items and coins have an average price point of
GBP73, whilst pre-owned jewellery items and coins have a higher
average price point of GBP199, at higher margins. There was a
significant trend by customers towards the purchase of new items,
which we believe was price related. New items represented 62% of
sales by volume in the quarter (Q4 2022: 53%) and 33% of sales by
value (Q4 2022: 25%). In particular, sales of new earrings and
coins (which attract a lower margin) were buoyant.
Sales of watches both by volume and value, grew in the fourth
quarter by 15% year on year, at an average price point of GBP1,600.
Margins are beginning to recover from mid-2023 levels.
As a result of the changed mix of sales, volume and blended
margin, overall sales in the quarter fell 3% by value year on year,
with a consequent reduction in gross profit earned. This was
particularly apparent in December, which followed a more
encouraging November.
Foreign Currency ("FX") and Holiday Money
Full year foreign exchange revenues grew 11% to c.GBP6.3m (2022:
GBP5.7m) with transaction volumes up 18% year on year.
The Group launched its on-line 'click and collect' service in
June 2023. We are pleased with early progress. Average transaction
value for 'click and collect' has been significantly higher than
for over the counter transactions at c.GBP700, compared to c.GBP400
for over the counter.
Good progress is being made in delivering the strategic growth
potential of this product. However, it is taking longer than
anticipated to achieve forecast volumes and revenues. Momentum
continued to build throughout the second half of the year,
including in the fourth quarter and into 2024.
Gold Purchase and Scrap
Gold purchase by value grew 18% for the full year.
Scrap margins have remained broadly consistent.
Other Services
As expected, demand for money transfer remains subdued, with
transaction volumes down year on year as pressure on disposable
income led customers to remit and receive funds less often. This
dynamic applies across all geographies and currencies.
Cheque cashing volumes and commissions were broadly flat year on
year.
Costs
As previously advised, firm action on costs was taken in H2 2023
and as a result, cost inflation moderated relative to H1 2023 as
expected. The Group remains subject to cost inflation which is
above headline inflation rates, in particular following the
forthcoming 10% rise in minimum wage from April 2024, and as a
result of price increases by key suppliers. Action will continue to
be taken to control costs and deliver ongoing cost
efficiencies.
Chris Gillespie, H&T chief executive said:
"The Group made significant progress in 2023, delivering record
profits and strong growth. Demand for our core Pawnbroking product
continues to grow and is attracting increasing numbers of customers
who are new to pawnbroking.
We were delighted to welcome record numbers of retail customers
in the pre-Christmas period. However, as has been widely reported,
customers were cautious in their spending, and this has impacted
our performance for 2023. We believe, despite this challenging
backdrop, that we have the right product offering and have
continued to invest in our store estate and our technology
platforms.
I cannot thank our people enough for their unwavering commitment
and enthusiasm. I look forward to updating the market further in
March."
Notice of Results
The Group expects to publish its preliminary results for the
financial year ended 31 December 2023, on Tuesday 12 March 2024
.
Current market consensus for profit before tax for year ending
31 December 2023 is GBP29.9m
Enquiries
H&T Group plc
Chris Gillespie, Chief Executive Officer +44(0)20 8225 2700
Diane Giddy, Chief Financial Officer
Shore Capital Ltd (Nominated Advisor
and Broker) +44(0)20 7408 4090
Stephane Auton/Iain Sexton (Corporate
Advisory)
Guy Wiehahn/Isobel Jones (Corporate
Broking)
Alma Strategic Communications (Public
Relations) +44(0)20 3405 0205
Sam Modlin handt@almastrategic.com
Andy Bryant
Rebecca Sanders-Hewett
Will Merison
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END
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